Thursday, February 04, 2010

Born Poor?, by:
Corey Pein: ...Bowles’ most recent paper ... examines how wealth is
transferred from parents to children in hunter-gatherer societies versus
agricultural societies. That might seem distant... But everyone can relate to
his chosen subject: inequality. ...

Bowles’ course was set in 1968, when he was an assistant professor at Harvard,
and the Rev. Dr. Martin Luther King Jr. came to his department looking for
advice on the next stage of his social justice campaign.

“We were just elated that we could use economics, which we had so
painstakingly learned, to answer questions that Dr. King thought were
important,” Bowles tells SFR. “We were also extremely angry that we were totally
unable to answer the questions on the basis of having gotten a PhD at Harvard.”

King’s assassination that year cut short the equality movement. ...

Most economists in 1968 thought of inequality as “somebody else’s problem,”
Bowles tells SFR. “I actually was denied the right to teach a graduate course in
inequality because it was said not to be economics.” It wasn’t always thus.

“The founders of the discipline of economics, almost to a man—and they were only
men—thought that the problem of distribution between classes—they used the word
classes—was the key to understanding why nations grew or not,” Bowles says. What
Bowles sees as the essence of his profession [is] problems of wealth
distribution...

Isn’t inequality merely the price of America being No. 1?

“That’s almost certainly false,” Bowles tells SFR. “Prior to about 20 years ago,
most economists thought that inequality just greased the wheels of progress.
Overwhelmingly now, people who study it empirically think that it’s sand in the
wheels.” ... Bowles offers a key reason why this is so. “Inequality breeds
conflict, and conflict breeds wasted resources,” he says.

In short, in a very unequal society, the people at the top have to spend a lot
of time and energy keeping the lower classes obedient and productive.

Inequality leads to an excess of what Bowles calls “guard labor.” In a 2007
paper on the subject, he and co-author Arjun Jayadev, an assistant professor at
the University of Massachusetts, make an astonishing claim: Roughly 1 in 4
Americans is employed to keep fellow citizens in line and protect private wealth
from would-be Robin Hoods.

Guard Labor versus Inequaltiy (Gini) across States

The job descriptions of guard labor range from “imposing work
discipline”—think of the corporate IT spies who keep desk jockeys from slacking
off online—to enforcing laws... The greater the inequalities in a society, the
more guard labor it requires, Bowles finds. ...

The problem, Bowles argues, is that too much guard labor sustains
“illegitimate inequalities,” creating a drag on the economy. All of the people
in guard labor jobs could be doing something more productive with their
time—perhaps starting their own businesses...

Liberals tend to think of inequality as a matter of class and race—and that’s
true, he says. But individual success hinges on a big X factor: “There’s a lot
of luck involved,” Bowles says.

No politician’s promise can remove that element of unpredictability. Which means
the smart policy, in Bowles’ view, is for the government to care for people who
suffer misfortune through no fault of their own. ... “The whole idea of social security,” Bowles says, “is to insure the unlucky by
having the lucky pay a little extra.” ... [more here]

With progressive taxes the lucky do pay a little extra, and that allows society to provide social insurance to the unlucky.

There are many additional ways to justify progressive taxation, e.g. the principle of equal marginal sacrifice, and if the guard labor hypothesis is correct, it provides yet another rationale for a progressive tax code.

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Inequality and "Guard Labor"

This is from a profile of Samuel Bowles:

Born Poor?, by:
Corey Pein: ...Bowles’ most recent paper ... examines how wealth is
transferred from parents to children in hunter-gatherer societies versus
agricultural societies. That might seem distant... But everyone can relate to
his chosen subject: inequality. ...

Bowles’ course was set in 1968, when he was an assistant professor at Harvard,
and the Rev. Dr. Martin Luther King Jr. came to his department looking for
advice on the next stage of his social justice campaign.

“We were just elated that we could use economics, which we had so
painstakingly learned, to answer questions that Dr. King thought were
important,” Bowles tells SFR. “We were also extremely angry that we were totally
unable to answer the questions on the basis of having gotten a PhD at Harvard.”

King’s assassination that year cut short the equality movement. ...

Most economists in 1968 thought of inequality as “somebody else’s problem,”
Bowles tells SFR. “I actually was denied the right to teach a graduate course in
inequality because it was said not to be economics.” It wasn’t always thus.

“The founders of the discipline of economics, almost to a man—and they were only
men—thought that the problem of distribution between classes—they used the word
classes—was the key to understanding why nations grew or not,” Bowles says. What
Bowles sees as the essence of his profession [is] problems of wealth
distribution...

Isn’t inequality merely the price of America being No. 1?

“That’s almost certainly false,” Bowles tells SFR. “Prior to about 20 years ago,
most economists thought that inequality just greased the wheels of progress.
Overwhelmingly now, people who study it empirically think that it’s sand in the
wheels.” ... Bowles offers a key reason why this is so. “Inequality breeds
conflict, and conflict breeds wasted resources,” he says.

In short, in a very unequal society, the people at the top have to spend a lot
of time and energy keeping the lower classes obedient and productive.

Inequality leads to an excess of what Bowles calls “guard labor.” In a 2007
paper on the subject, he and co-author Arjun Jayadev, an assistant professor at
the University of Massachusetts, make an astonishing claim: Roughly 1 in 4
Americans is employed to keep fellow citizens in line and protect private wealth
from would-be Robin Hoods.

Guard Labor versus Inequaltiy (Gini) across States

The job descriptions of guard labor range from “imposing work
discipline”—think of the corporate IT spies who keep desk jockeys from slacking
off online—to enforcing laws... The greater the inequalities in a society, the
more guard labor it requires, Bowles finds. ...

The problem, Bowles argues, is that too much guard labor sustains
“illegitimate inequalities,” creating a drag on the economy. All of the people
in guard labor jobs could be doing something more productive with their
time—perhaps starting their own businesses...

Liberals tend to think of inequality as a matter of class and race—and that’s
true, he says. But individual success hinges on a big X factor: “There’s a lot
of luck involved,” Bowles says.

No politician’s promise can remove that element of unpredictability. Which means
the smart policy, in Bowles’ view, is for the government to care for people who
suffer misfortune through no fault of their own. ... “The whole idea of social security,” Bowles says, “is to insure the unlucky by
having the lucky pay a little extra.” ... [more here]

With progressive taxes the lucky do pay a little extra, and that allows society to provide social insurance to the unlucky.

There are many additional ways to justify progressive taxation, e.g. the principle of equal marginal sacrifice, and if the guard labor hypothesis is correct, it provides yet another rationale for a progressive tax code.